HONG KONG: China data centre operator GDS Holdings Ltd is seeking a US$3.4bil-equivalent loan for its data centre operations in Malaysia, according to sources.

The borrowing would be its biggest ever loan. It would also be among the largest financings for the sector by any borrower in Asia.

The company’s international arm, DayOne, formerly known as GDS International, is aiming for a five-year facility, according to the sources. It would comprise a US$1.7bil tranche and RM7.5bil being syndicated to the broader market, said the sources.

Malaysia is turning into a beneficiary of Asia’s growing need for data centres to support the boom in artificial intelligence.

The southern state of Johor – which sits across from the city-state of Singapore – has about 30 projects completed or under construction, plus 20 more awaiting approvals. Companies investing have included Microsoft Corp and ByteDance Ltd.

Seven lenders have been appointed as mandated lead arrangers and bookrunners of the loan, including DBS Group Holdings Ltd, Malayan Banking Bhd

and Standard Chartered Plc.

DayOne didn’t respond to a request for comment.

The proceeds of DayOne’s loan will be for refinancing and capital expenditure purposes, according to the sources.

The unit has data centres in Singapore, Malaysia, Indonesia, Thailand, Hong Kong and Japan. The company started building its presence in Johor in 2021 and launched its first facility there in 2023, according to its website.

GDS Holdings may list DayOne as soon as this year, Bloomberg News reported last month.

The entity last tapped the loan markets in December 2023 when it raised a RM1.27bil syndicated green facility for expansion of its campus in Johor. — Bloomberg